Greece GDP Q4 2016

Greece: Revised data show economy plummeted in Q4

March 6, 2017

A complete dataset released on 6 March by the Hellenic Statistical Authority (EL.STAT) showed that the deterioration in Greece’s economy at the end of 2016 was much worse than previously estimated. GDP contracted a notable 1.4% over the same period of 2015, a significant downward revision from the flash estimate of 0.2% growth. The figure drastically contrasted Q3’s 2.2% expansion and marked the worst result since Q3 2015—when ‘Grexit’ fears and newly introduced capital controls curtailed economic activity.

The deterioration in economic conditions was driven by a slump in the domestic economy. Fixed investment nosedived 13.5%, the largest drop since Q2 2015, as a sour business environment continues to plague the country. Government spending contracted 2.0%, which was a starker fall than the 1.3% decrease in Q3. Public spending has contracted for four consecutive quarters as the government tries to return to a sustainable fiscal stance and fulfill creditor demands. Household spending slowed from a 6.8% increase in Q3 to a 1.2% expansion in Q4. Despite gains in the labor market, Greece’s unemployment rate remains notably above the Eurozone average and a total of eleven cuts to pensions are dampening household spending.

The downturn in the domestic economy caused a fall in imports, which decreased 2.2% (Q3: +14.1 year-on-year). Export growth moderated from 9.6% in Q3 to 3.9% in Q4, but still remained positive. A stabilization in oil prices have helped shore up exports of refined oil products and the country is benefiting from strong tourism earnings.

On a quarterly basis, the economy fell 1.2% in Q4 in seasonally-adjusted terms, which contrasted 0.6% growth in the third quarter. For the full year 2016, the revised data show that economy recorded zero growth, below the 0.3% increase previously estimated. The poor reading underscores the challenging state of the Greek economy and has increased doubt that the government will be able to hit tough bailout targets. A strong recovery has yet to materialize despite numerous reforms and bailouts, and the latest bailout review—which will unlock fresh funds for the government—has been stalled due to a standoff between the EU and the IMF.

Greece’s outlook is bleak. While the country is seen growing a better 1.7% this year, the pace of recovery is meagre given the size of the economic crisis. In 2018, the FocusEconomics panel sees GDP expanding 1.9%.

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Greece Economic News

The number of unemployed fell by 103 in November from the previous month and by 119,363 compared with November 2016, according to recent data released by the Hellenic Statistical Authority (EL.STAT).
The unemployment rate was unchanged from October’s revised 20.9% (previously reported: 20.8%).

Industrial production expanded a working-day-adjusted 0.8% in November compared to the same month of the previous year, which was slightly above October’s revised 0.7% growth (previously reported: +0.5% year-on-year).

Industrial production expanded a working-day-adjusted 0.5% in October compared to the same month of last year, which was notably below September’s revised 3.2% growth (previously reported: +2.4% year-on-year).